As seniors approach retirement, one of their most common concerns is ensuring their hard-earned savings last throughout their golden years. Maximizing savings requires careful planning, smart retirement money management, and strategic investment decisions. In this blog post, we’ll share five essential tips that can help seniors make the most of their retirement savings. Whether you’re already retired or planning for the future, these tips will provide valuable insights to help you navigate the complex landscape of retirement savings and ensure you never have to ask “Will my retirement savings last?”

5 Money Management Tips for Retired Seniors

If you’re looking at your bank account and wondering, “How long will retirement savings last?” don’t worry. Putting together a smart financial savings and investment mix is not as complicated as it may seem. Here are five ways to help your retirement savings grow — and last — during your golden years.

1.Calculate Your Life Expectancy

First, to put together a savvy financial strategy, you need to know how long your retirement savings will last. That means you need a way to accurately predict your lifespan. While there’s no way to tell the future, advancements in technology, data analysis, and actuarial sciences have led to tools that can estimate your life expectancy based on several factors. Knowing your ballpark lifespan can help you make informed decisions about your finances and your future.

Life Expectancy Calculators

One of the most helpful retirement planning tools is a life expectancy calculator. Several online platforms offer life expectancy calculators that provide an estimated lifespan based on a few key inputs: your age, lifestyle choices, medical history, family medical background, and other relevant information. Here are a few you can explore:

Keep in mind: the results of these life expectancy calculators should be taken with a grain of salt. Use their predictions as a starting point for your financial strategy.

Once you have an estimated lifespan, you can move on to the next step in maximizing your retirement income: determining how much you can spend each month during retirement.

2. Determine Monthly Expenses

Next, you’ll want to assess your monthly expenses and the amount of retirement savings you have to work with. By calculating your savings, estimating your expenses, factoring discretionary spending, and incorporating your life expectancy, you can strike a balance between financial security and the freedom to pursue your hobbies and interests during retirement.

First, you’ll want to assess your retirement savings. Take inventory of how much you have across all financial vehicles: savings, pensions, investments, retirement accounts, and Social Security. You may want to work with a financial advisor to navigate this process.

Next, you’ll need to estimate your expenses in retirement. Take a look at your current spending patterns and calculate how much you spend on housing, healthcare, utilities, food, insurance, and living expenses—factor in any potential changes, like downsizing or paying off your mortgage.

Finally, you’ll want to determine how much you’ll need for discretionary spending. Perhaps you want to spend the early half of your retirement traveling to places you’ve never visited before. Or maybe you want to invest time and money into hobbies you’re interested in. Whatever you decide to spend discretionary income on, factor that into your retirement plan.

It’s important to keep in mind this rule of thumb when putting together your retirement spending plan: experts advise withdrawing 4% of your investments in the first year. Then, every year after, you adjust the dollar amount to keep up with inflation. The concept of the 4% rule revolves around withdrawing a consistent amount from your portfolio each year, accounting for inflation adjustments. There’s no one-size-fits-all approach to determining the ideal spending rate in retirement, so make sure to adjust the 4% rule for your circumstances.

3. Consider Ways to Earn Supplemental Income

When it comes to how to make your savings last in retirement, there’s a path that many seniors decide to take: earn supplemental income. Some folks enter retirement excited to revel in a well-deserved break from years of working, only to find themselves missing the structure and engagement a job provides daily. Others simply want to boost their retirement savings without working as hard as they used to during their career. Whatever the case may be, earning income in retirement can help you maintain a sense of purpose while bolstering your financial security.

There are a few ways to earn supplemental income in retirement. Explore the options below to see which path may be the right one for your retirement journey.

  • Pursue part-time employment. From freelancing and consulting to pursuing flexible roles that align with their interests, many seniors enjoy collecting a paycheck doing something they love for a few hours a week. Part-time work not only adds to your retirement savings, but also allows you to stay active and connected within your community.
  • Enter the gig economy. From becoming a rideshare driver to a pet sitter, you can explore the gig economy for flexible jobs that allow you to work when you want — and earn a little extra cash.
  • Monetize your passion project. One thing you have a lot of during retirement is time. You could put it toward generating income from your passions, hobbies, and/or skills. You could offer lessons and workshops, or sell physical goods within your community or online.

As you make plans to earn extra income in retirement, keep in mind your social security benefits. If you collect social security at your full retirement age, you can earn as much income as you want without any reduction in your social security benefits. However, if you begin collecting social security before reaching your full retirement age and you continue to work, your earnings should fall under the earning limit of $18,960. If you earn above that amount, $1 will be deducted from your social security benefits for every $2 you earn above the limit.

4. Evaluate Your Investments

There’s a common myth when managing retirement investments: when you stop working, all of your retirement savings should be kept in the most conservative savings and investment vehicles possible. While this line of thinking is meant to protect the nest egg you’ve accumulated over your lifetime, keeping all of your savings in cash, bonds, or CDs could lead to diminishing returns. Why? This commonplace conservative retirement strategy relies on interest rates to make money. Unfortunately, interest rates over the last decade have been extremely low. As a result, the returns from these options haven’t even kept up with inflation.

There’s a better strategy to consider. Rather than socking away your savings in slow-growth investment vehicles that perform below the annual rise in the cost of living, consider developing a mix of savings and investments that balance risk and reward.

  • Cover short-term living expenses with cash. One way to balance risk and reward is to set aside two to three years of living expenses in cash and leave the rest of your savings in a mix of investments. Having enough cash set aside for your short-term living expenses allows you to ride out any downturns in the market without taking investments out at a loss. However, your cash stash doesn’t have to stay in your regular banking accounts. It can be kept in a variety of banking vehicles — money market accounts, online savings accounts, and cash management accounts, for example — that allow you to earn a slight return but still have access to your cash when needed.
  • Park medium-term savings in low-risk savings accounts. You can put money that you plan on using in the next two to ten years in low-risk savings vehicles, like Certificates of Deposit (CDs), treasury securities, and corporate bonds. This allows your money to grow slowly with minimal risk. Here are a few examples of where to park your medium-term cash.
  • Diversify investments for long-term growth and dividend income. For the remainder of your savings, you’ll want to explore a mix of investments in stocks and mutual funds — for long-term growth — and dividend income for a consistent stream of earnings. Rather than tying up all of your retirement savings in slow-growth savings accounts like CDs and treasury securities, diversifying your investments in some slightly riskier accounts can help you earn in your later years and keep up with rising costs of living.
  • Secure your financial future with insurance: protection and income opportunities. Insurance can serve as a way to mitigate financial risk exposure to death, disability, and declining health. In addition, annuities are a way to collect guaranteed income over a specific period — or sometimes for life. You can purchase an annuity from an insurance company by contributing a lump sum or payments over time to the company. In return, the insurance company pays you a regular income for a specific period of time or the rest of your life. The insurance company typically invests the principal amount to grow it over time.
  • Tap into assets you may not realize you own. Life insurance can be an excellent source of income in retirement. If you no longer want or need your life insurance policy, you can sell it in a life settlement to a buyer (usually a licensed life settlement provider). You receive a one-time cash payout that’s, on average, four times the cash surrender value. The life settlement provider takes ownership of your policy and collects part or all of the death benefit. Finally, long-term care insurance can help retired folks protect themselves from the costs associated with home care, assisted living, and/or nursing home care.

5. Consult a Financial Advisor

Work with a financial advisor who has a fiduciary duty to act in the best interest of their client: YOU. You can verify that your financial advisor is a fiduciary by looking them up on the SEC Investment Adviser Public Disclosure website to ensure they legally have your best interest in mind when providing financial guidance. Finding a financial advisor whose registered with the SEC for personalized retirement planning, expert guidance on complex financial matters, and objective advice is incredibly important (and fiscally responsible). Advisors can help create a tailored retirement plan, navigate estate planning and tax optimization, and provide reassurance during market volatility. They stay informed on financial strategies, monitor plans, and offer accountability. Partnering with an advisor ensures that you have professional support, peace of mind, and a disciplined approach to managing your finances in retirement.

In retirement, you have the very difficult task of balancing the management of savings with enjoying the fruits of your labor. To help you maximize your retirement savings — and enjoy your retirement along the way — here’s an easy, 10-step blueprint to a bountiful retirement:

  1. Determine your retirement budget. Creating a retirement budget is like the old adage: if you don’t know where you’re going, you’ll end up somewhere else. Make sure you know how much you need to save, otherwise, you may end up using too much, too fast.
  2. Project the duration of your savings. Using your retirement budget, figure out how long you can live on that allowance. If that amount of time seems in line with your life expectancy, then you’re on track with retirement budgeting. If you think you’ll live longer, you may need to evaluate your retirement budget.
  3. Establish liquid emergency funds. Life is full of surprises. Make sure to have access to cash when an unexpected situation comes along.
  4. Generate income for as long as possible. The longer you can work, the better it is for your bank account, healthcare savings, and even social health.
  5. Calculate how much you’ll withdraw. Adjust your monthly withdrawal percentage from your savings accounts every year and make sure to withdraw the required minimum distributions from your retirement accounts.
  6. Maximize social security and Medicare benefits. Wait as long as possible before collecting social security and make sure to enroll in Medicare benefits to avoid paying out-of-pocket for health insurance as a senior.
  7. Seek diversified growth with investments. Don’t limit all of your investments to conservative funds that don’t keep up with inflation. Take smart, moderate risks to ensure your nest egg steadily grows and lasts for your lifespan.
  8. Live healthily. Another important “investment” strategy is to invest in your health. Taking care of your body ensures you don’t have to dip into savings and investments early to pay for medical procedures.
  9. Maintain insurance and annuities. Keep up with insurance and annuity premiums as a form of financial protection against death, disability, and declining health. You can also use these financial innovations as income in later years.
  10. Constantly monitor and reevaluate your financial strategy. Regular monitoring can help you see that you’re on track — or completely off course. Take time to check in and analyze your finances so you can adjust your long-term financial strategy over time.

Now that you have a roadmap for a fulfilling retirement, it’s time to put your plan into action. Reach out to us at Retirement Genius if you have additional questions on how to retire well. We’re here to share knowledge and help you navigate the winding path of retirement!